They also build scalable infrastructures that enable them to readily adapt their business models and services to changes in technology, consumer behavior, and market demand.

Meanwhile, traditional agencies — PR, SEO, advertising, web, and content — that are resistant to change will struggle to remain relevant. They are slowed down by legacy systems that make it increasingly difficult to evolve and compete as clients seek more innovative strategies and services.

Unless traditionalists make dramatic adjustments, they run the risk of quickly becoming obsolete.

A Disruptive Force

Let’s look at five ways hybrid agencies disrupt the industry:

They drive change of outdated pricing models. Model firms are built on efficiency and productivity, not billable hours. The traditional billable hour system is tied exclusively to outputs, not outcomes, and assumes that all agency activities are of equal value. Hybrids don’t have to compete on price, but their ability to more efficiently provide services and deliver results is a differentiator, and gives them flexibility.Plus, they are able to produce profits through multiple recurring revenue streams — education, training, publishing, software reseller licensing, affiliate programs — so they can focus on strategy, execution and results rather than billable-hour quotas.

They lead the convergence of services. Disruptive firms are built on the versatility of social-media and tech-savvy professionals. These professionals possess exceptional copywriting skills, along with dynamic personalities that enable them to build strong personal brands.Hybrid professionals are trained to deliver services across search, mobile, social, content, analytics, web, PR, and email marketing. They provide integrated solutions that used to require multiple agencies and consultants.

They attract top talent. The most advanced and successful hybrid firms are talent magnets.They offer A players — the high performers — dynamic cultures and systems that give them autonomy, creative freedom, and endless career opportunities.

They integrate technology into business and services. Trends and shifts in consumer behavior, business processes, software, data analysis, communications, and marketing philosophies have affected the need for evolved services and consulting. Prototype agencies integrate technology to create remarkably efficient agency management and client services systems that lower operating costs, while increasing productivity and profitability.

They create more accountability through measurement. Marketing executives are drowning in data, with access to endless streams of information about prospects and customers. However, data without analysis is simply noise. |Leading marketing agencies turn information into intelligence, and intelligence into action. They build campaigns that consistently produce measurable outcomes, including inbound links, website traffic, leads, and sales. Hybrid agencies are leading the shift away from arbitrary metrics, such as media impressions, reach, advertising equivalency and PR value, and are challenging their peers to deliver data- and results-driven services.

The Future Belongs to the Underdogs and Innovators

Traditional firms that are unable or unwilling to evolve will fade, and a new breed of marketing agencies will rise to prominence. These hybrid agencies are risk takers that fight to remain nimble, always thinking like startups and acting like underdogs.

Their presence will be a disruptive force in the marketing services industry for years to come, shifting the balance of power and raising the bar for what’s possible when organizations seek marketing agency partners.

Your Thoughts

Are you seeing shifts in marketing agency structures, pricing, and personnel? How is the increasing demand for integrated services affecting agencies?

I can say that for us, we see #4 as being key! We work with many firms to help them incorporate technology into their services. Thru their case studies they have found a great increase in business. They are able to stop turning away business & go after new and exciting things helping them grow!

I sat in on your webinar this week! I don't think I mentioned that I was going to do that, but thanks for letting me know about it. I am a big fan of shifting away from billable hours and measuring based on outcome. I too am looking forward to the book!

I'm a big fan of that kind of disruption! I'm with Gini, I like to think that I'm doing that with my little piece of the pie and as I move along, attracting the right kind of talent to do it with me. Awesome look at the hybrid agency and how it really will transform and lead the industry. I will have to pick up your book!

Having worked at a hybrid agency myself I can say that synergy that comes from working with a variety of different media and talent pools is invaluable. I started as a code-slave and a year later I was a marketing and product development expert. If you have the opportunity to work for a company like this, take it! Its the best education you'll ever have.

What I'm really curious about is how these agencies will develop. At least around here I'm seeing that most traditional agencies THINK they are evolving, but they are merely giving lip service to some of the newer things like social media and more accountable pricing structures, but aren't really executing properly. I'm sure some agencies will be able to make the transformation, but it requires a complete overhaul of their mindset, in the same way that any business needs to change its mindset to adapt.

@Lisa Gerber Thanks, Lisa! I received some great feedback from the webinar, and we have a ton of questions that were submitted that we plan to turn into a blog series for agencies. Glad you were able to attend.

@EricaAllison Thanks, Erica! To me, talent is the great differentiator in an agency. We can follow standard processes and business models, but you can't replicate the talent from one agency to the next.

@ginidietrich Thanks, Gini! And congrats on your book too. I love the concept behind Marketing in the Round. We need more talk and action around integration. There are still too many silos, and not enough truly integrated approaches to marketing. Good luck with the final two weeks. Anyone who's written a book can appreciate what a grind it is, but it's definitely worth it in the end. Best wishes, and happy holidays!

@KenMueller I agree. Traditional agencies will struggle to truly evolve. In the book I go into great detail about the developing marketing services ecosystem, which I believe will be defined by a more open and collaborative group of emerging firms. The smaller, more nimble agencies have tremendous opportunities to take leadership positions, and transform the industry.

@paulroetzer@Lisa Gerber The only thing I would add here is in a service business you HAVE to bill time, if only so you have a clear report of how much time it takes to achieve certain results. We don't bill by the hour to clients, but we have to track our time so our CFO and I know how to charge and whether or not a certain result is profitable for us or not. I think what needs to go away is the "you're going to pay for how many hours this takes me" idea.

@paulroetzer@ginidietrich@Lisa Gerber Glad this was clarified. PR-wise, the real revelation (once you get past the polarizing headline ;) is bottom-line Focus and Efficiency >> "Clients should not have to pay for the inefficiencies of senior execs to learn the digital game." Hourly billing obviously still necessary for service-based clients, but what I found most eye-opening as I work to rebrand/launch our new startup is the foundational elements Paul articulates. How he did it the right way with Good Old-Fashioned trial/error - testing and fine-tuning service packages and pricing models based on the needs of his partners, clients. Really enjoyed the section on Loss Leaders, and how unassuming but frankly Paul distills everything for others as a solid point of reference. Lot to look forward to this year!

@ginidietrich@Lisa Gerber Agree 100%. I actually present the case in the book that time tracking in a non-billable hour model is even more important to measure efficiencies and productivity. Plus, you have to tie employee production to a dollar value.

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